5 Stocks Triggering Big Breakout Trades

DELAFIELD, Wis. (Stockpickr) -- Trading stocks that trigger major breakouts can lead to massive profits. Once a stock trends to a new high or takes out a prior overhead resistance point, then it's free to find new buyers and momentum players who can ultimately push the stock significantly higher.

Breakout candidates are something that I tweet about on a daily basis. I frequently tweet out high-probability setups, breakout plays and stocks that are acting technically bullish. These are the stocks that often go on to make monster moves to the upside. What's great about breakout trading is that you focus on trend, price and volume. You don't have to concern yourself with anything else. The charts do all the talking.

Trading breakouts is not a new game on Wall Street. This strategy has been mastered by legendary traders such as William O'Neal, Stan Weinstein and Nicolas Darvas. These pros know that once a stock starts to break out above past resistance levels and hold above those breakout prices, then it can easily trend significantly higher.

With that in mind, here's a look at five stocks that are setting up to break out and possibly trade higher from current levels.

TCP International


One consumer goods stock that's starting to spike within range of triggering a big breakout trade is TCP International  (TCPI), which designs, develops, manufactures and markets lamps, fixtures and Internet-based lighting control solutions. This stock has been smacked lower by the bears over the last six months, with shares down large by 32.8%.

If you take a look at the chart for TCP International, you'll notice that this stock has been consolidating and trading inside of a tight range for the last month or so, with shares moving between $3.63 on the downside and $4.46 on the upside. Shares of TCPI have just started to spike higher right above the lower-end of that range, and it's beginning to move close to trigger a big breakout trade above the upper-end of this sideways trending chart pattern.

Traders should now look for long-biased trades in TCPI if it manages to break out above some near-term overhead resistance levels at $4.10 to $4.46 a share with high volume. Look for a sustained move or close above those levels with volume that registers near or above its three-month average action of 367,863 shares. If that breakout gets started soon, then TCPI will set up to re-test or possibly take out its next major overhead resistance levels at its 200-day moving average of $5.51 to $6 a share, or even $6.50 to $7 a share.

Traders can look to buy TCPI off weakness to anticipate that breakout and simply use a stop that sits right around its range lows of $3.71 to $3.63 a share. One can also buy TCPI off strength once it starts to take out those breakout levels with volume and then simply use a stop that sits a comfortable percentage from your entry point.

LeapFrog Enterprises


Another stock that's quickly moving within range of triggering a near-term breakout trade is LeapFrog Enterprises  (LF), which designs, develops and markets technology-based learning products and related proprietary content for children worldwide. This stock has been decimated over the last six months, with shares plunging lower by 60.5%.

If you take a glance at the chart for LeapFrog Enterprises, you'll notice that this stock has been consolidating and trending sideways for the last three months and change, with shares moving between $2.02 on the downside and $2.68 on the upside. Shares of LF have now started to trend higher off that recent $2.02 low and it's beginning to move within range of triggering a near-term breakout trade above the upper-end of its recent sideways trending chart pattern.

Traders should now look for long-biased trades in LF if it manages to break out above some near-term overhead resistance levels at $2.23 to its 50-day moving average of $2.24 a share with high volume. Look for a sustained move or close above those levels with volume that hits near or above its three-month average action of 777,103 shares. If that breakout takes hold soon, then LF will set up to re-test or possibly take out its next major overhead resistance levels at $2.48 to $2.68 a share, or even its gap-down-day high of $3 a share from December. Any high-volume move above $3 a share will then give LF a chance to re-fill some of its gap-down-day zone that started at $4 a share.

Traders can look to buy LF off weakness to anticipate that breakout and simply use a stop that sits right around its recent low of $2.02 a share. One could also buy LF off strength once it starts to clear those breakout levels with volume and then simply use a stop that sits a comfortable percentage from your entry point.

FireEye

Another stock that's starting to trend within range of triggering a big breakout trade is FireEye  (FEYE), which provides cybersecurity solutions for detecting, preventing and resolving cyber-attacks. This stock has been on fire over the last six months, with shares sharply to the upside by 36%.

If you take a glance at the chart for FireEye, you'll see that this stock recently formed a major bottoming chart pattern, since shares found buying interest over the last month each time it pulled back to around $41 to $39.50 a share. Following that bottom, shares of FEYE have started to spike higher back above its 50-day moving average and it's beginning to move within range of triggering a major breakout trade above a key downtrend line. That downtrend line dates back February and it has acted as resistance for this stock on several occasions.

Traders should now look for long-biased trades in FEYE if it manages to break out above a key downtrend line that will trigger over $44 to $44.89 a share with high volume. Watch for a sustained move or close above those levels with volume that registers near or above its three-month average action of 5.11 million shares. If that breakout triggers soon, then FEYE will set up to re-test or possibly take out its next major overhead resistance levels at its 52-week high of $46.44 a share. Any high-volume move above that level will then give FEYE a chance to tag its next major overhead resistance levels at $55 to $60 a share, or even $65 to $70 a share.

Traders can look to buy FEYE off weakness to anticipate that breakout and simply use a stop that sits right below some major near-term support levels at $40.81 to $39.47 a share. One can also buy FEYE off strength once it starts to bust above those breakout levels with volume and then simply use a stop that sits a comfortable percentage from your entry point.

Michael Kors


Another stock that's starting to trend within range of triggering a big breakout trade is Michael Kors  (KORS), which is engaged in the design, marketing, distribution and retailing of branded women's apparel and accessories and men's apparel. This stock has been moving to the downside over the last six months, with shares off notably by 17%.

If you take a glance at the chart for Michael Kors, you'll notice that this stock has been downtrending badly for the last six months, with shares plunging lower from its high of over $78 a share to its recent low of $59.88 a share. During that downtrend, shares of KORS have been consistently making lower highs and lower lows, which is bearish technical price action. That said, shares of KORS have now started to spike higher off that $59.88 low with volume, and it's now quickly moving within range of triggering a huge breakout trade above a key downtrend line.

Traders should now look for long-biased trades in KORS if it manages to break out above a key downtrend line that will start to trigger over resistance at $62 to $64 a share with high volume. Look for a sustained move or close above those levels with volume that hits near or above its three-month average action of 2.81 million shares. If that breakout develops soon, then KORS will set up to re-test or possibly take out its next major overhead resistance levels at $66 to $68.82 a share, or even $70 to its 200-day moving average of $71.24 a share..

Traders can look to buy KORS off weakness to anticipate that breakout and simply use a stop that sits right around that recent low of $59.88 a share. One can also buy KORS off strength once it starts to trend above those breakout levels with volume and then simply use a stop that sits a comfortable percentage from your entry point.

Cogentix Medical


My final breakout trading prospect is medical equipment player Cogentix Medical  (CGNT), which designs, develops, manufactures and markets products for the urology market and flexible endoscopy. This stock has been annihilated by the sellers over the six months, with shares falling sharply lower by 68%.

If you look at the chart for Cogentix Medical, you'll notice that this stock recently formed a major bottoming chart pattern at $1.43, $1.45 and $1.42 a share. That bottom is coming after shares of CGNT downtrending badly, with shares plunging from over $6 a share to that $1.42 a share low. Shares of CGNT are now starting rip higher right above some near-term support at $1.54 a share, and it's beginning to trend within range of triggering a major breakout trade above some key near-term overhead resistance levels.

Traders should now look for long-biased trades in CGNT if it manages to break out above some key near-term overhead resistance levels at its 50-day moving average of $1.73 a share to more resistance at $1.80 a share with high volume. Look for a sustained move or close above those levels with volume that registers near or above its three-month average action of 43,603 shares. If that breakout materializes soon, then CGNT will set up to re-test or possibly take out its next major overhead resistance levels at $2.20 to around $2.50 a share, or even $2.75 to $2.90 a share.

Traders can look to buy CGNT off weakness to anticipate that breakout and simply use a stop that sits right below that key near-term support at $1.54 a share or even around that recent bottom low of $1.42 a share. One can also buy CGNT off strength once it starts to move above those breakout levels with volume and then simply use a stop that sits a conformable percentage from your entry point.

This article is commentary by an independent contributor. At the time of publication, the author held no positions in the stocks mentioned.

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